ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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JAPAN- A House of Cards

A House of Cards? V L Rao AN important factor in Japans post- War growth, which is often ignored, is the peculiar financial structure of most Japanese companies. An analysis of the balance-sheets of the industrial and trading companies listed on the First Section of Tokyo's stock market shows that, on average, equity capital and capital raised from internal sources account for only 15 per cent of the total capital employed in these companies. The remaining 85 per cent is borrowed. The President of Sumitomo Chemicals is reported to have once said that if he took his company's balance- sheet to an American bank and asked for a loan, he would be laughed at.

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